Coming Week: Upside Down
Recession is no longer the taboo word on Wall Street. It's being tossed around like confetti.
The new phrase that can't be uttered is "systemic risk," and with bond insurer
T.J. Marta, fixed income strategist with RBC Capital Markets, estimates that roughly $2.5 trillion in outstanding debt is backed by bond insurers like Ambac and MBIA (MBI), and credit downgrades are a mortal threat to their business models.
If the bond insurers fail, that raises the specter of a massive wave of wealth destruction in a global financial system that is flooded with illiquid and opaque derivative securities of which there is little understanding, except that their value is connected to credit ratings on structured finance securities."This is going to be worse than anybody thinks," says Marta. "What I heard from Ambac
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